Wiz, the Israeli cybersecurity sensation, once aimed for an IPO. Now, it’s poised to embrace a massive $23 billion acquisition by Google. This deal reshapes Wiz’s trajectory and highlights the unpredictable nature of the tech sector.
The $23 Billion Deal: A Double-Edged Sword
The Hypothetical Sum
Google’s parent company, Alphabet, is reportedly set to buy Wiz for $23 billion. While this staggering sum is hard to dismiss, some feel it’s a “very good, but not great” outcome. The disappointment stems from the missed IPO opportunity and the loss of an Israeli tech giant.
Local Growth Sacrificed
Had Wiz pursued an IPO and remained a local company, it would have boosted Israel’s economy significantly. The sale to Google, however, shifts this growth and its benefits to the U.S.
- Missed IPO: Potential local growth and economic benefits lost
- Revenue Impact: Higher revenues for the Israeli state treasury if registered locally
Wiz: A Testament to Israeli Innovation
Despite Concerns, A Success Story
Despite the concerns, Wiz’s journey remains a remarkable Israeli success story. Even if its intellectual property is U.S.-registered and it’s branded as an American company, Wiz’s roots are undeniably Israeli.
- Success: A foundational event for Israel’s high-tech economy
- Global Presence: Enhances Google’s commitment to Israel
Setting New Standards
Google’s willingness to pay such a high price sets a new standard for revenue multipliers. It signals that Israel produces not just unicorns, but real tech giants.
- Revenue Multipliers: Comparison with giants like Check Point and Palo Alto
- Market Signal: Israel’s capability to produce significant companies
Financial and Entrepreneurial Impact
Financial Windfall
The deal will generate at least $2 billion in taxes from the Israeli founders and employees. This immediate financial benefit, while substantial, could have been larger if the company remained local.
- Tax Revenue: At least $2 billion expected
- Ownership: Founders and employees hold significant shares
Entrepreneurial Ripple Effect
The acquisition will also foster a new generation of entrepreneurs who will leave Wiz to start their own ventures, continuing Israel’s legacy as the “Startup Nation.”
- New Entrepreneurs: Founders and employees likely to start new ventures
- Continued Innovation: Contribution to Israel’s startup ecosystem
The Founders: Unlikely Heroes of the Israeli Tech Scene
The Team Behind Wiz
Wiz’s founders – CEO Assaf Rappaport, CTO Ami Luttwak, VP Product Yinon Costica, and VP R&D Roy Reznik – represent a demographic that contrasts sharply with the current Israeli government’s ideals.
- Background: Young liberals from central Israel, opposed to judicial overhaul
- Military Service: Significant roles in IDF’s technological units
Previous Success
Before Wiz, they founded Adallom, which was sold to Microsoft for $320 million. Their experience and connections helped them build Wiz into a fast-growing cybersecurity powerhouse.
- Adallom Sale: Formed the basis for Microsoft’s cyber division
- Wiz’s Growth: Embodying the “Startup Nation” on steroids
Rapid Growth and Strategic Moves
Unexpected Speed
Wiz’s rise has been rapid, achieving what many thought impossible in just a few years. Initially aiming for an IPO, the team instead faced the reality of investor influence and market dynamics.
- Initial Goal: IPO aspirations
- Investor Influence: Shift towards acquisition due to market pressures
Investment and Strategy
Investments from major venture capital funds, including Andreessen Horowitz, set the stage for this massive deal. The fund’s entry at a $12 billion valuation pushed for a quick and significant return.
- Key Investors: Andreessen Horowitz, Sequoia Capital, Index Ventures, Lightspeed, Insight Partners, Blackstone
- Valuation: $12 billion investment round
Competitive Landscape
Wiz’s acquisition strategy included smaller purchases like Gem Security. The company’s rapid growth and market penetration, despite initial losses, positioned it well for the acquisition.
- Acquisitions: Enhanced technological solutions with strategic purchases
- Market Penetration: Aggressive growth with competitive pricing
Legal and Market Challenges
Ongoing Lawsuit
Wiz faces a lawsuit from Israeli rival Orca, claiming technology theft. This legal battle, set for trial in 2025, is a significant factor in the timing of the Google acquisition.
- Lawsuit: Orca’s claims of technology copying
- Trial Date: December 2025
Market Readiness
Despite its high valuation, Wiz is not yet ready for an IPO. The company’s financials, including its losses, make a public offering premature in the current market environment.
- Financial Health: Growing but not yet profitable
- IPO Readiness: Several years away from sustainable public offering
Conclusion: A Pivotal Moment for Wiz and Israeli Tech
The $23 billion acquisition of Wiz by Google marks a pivotal moment in Israeli tech history. While it shifts the company’s growth from local to global, it underscores the dynamic and unpredictable nature of the tech sector. This deal not only highlights the immense potential of Israeli startups but also sets the stage for future entrepreneurial ventures.
Learn more:
- Wiz Official Website
- Google’s Acquisition Strategy
- Andreessen Horowitz Investments
- Sequoia Capital
- Index Ventures
Photo credit: CTech
